Tag Archives: economic stimulus package

THE SARBANES-OXLEY ACT OF ’02 IS KILLING US IN ’09

Bookmark and Share    In 2002, congress created legislation commonly called the Sarbanes-Oxley Act. It was designed to respond to the accounting scandals of Enron and other business interests of the time.antsoxdummyThe legislation established new and increased regulations for all American owned and operated public company boards.

At the time, the Sarbanes-Oxley sponsored Public Company Accounting Reform and Investor Protection Act of 2002 was considered to contain the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt.”

Sponsored by Paul Sarbanes, a Maryland Democrat Senator and Ohio Republican Congressman Michael Oxley, the bill passed with bipartisan support and was signed into effect by a Republican President, George W. Bush.  So credit and blame lies in the lap of both major parties but now, almost seven years later, the question is does Sarbanes-Oxley deserve more blame than credit.

The political purpose of the bill was achieved.  It helped to restore public confidence in the securities markets.

In the wake of the accounting scandal that brought down energy giant Enron, its stock prices plummeted from more than $90.00 a share to less than 50 cents a share and investors lost billions and Enron eventually went bankrupt. In response to the shocking demise of Enron, congress tried to act in a way that would restore investors confidence by trying to insure that the scandalous practices of Enron would not be repeated.

So congress responded to the problem which took care of the political objective. They did something about it. But what did they really do about it?

Regretfully, all they actually did was make themselves look good. They made themselves look like responsible legislators responding to our needs but looks are deceiving because seven years later, Sarbanes-Oxley is proving to be more of a hindrance than a help.

There is little evidence proving that the government entity created by Sarbanes-Oxley to oversee the accounting practices of businesses has been effective. In fact, after Democrats refused to pass legislation that would have changed their own accounting practices which led to the need to bailout FannieMac and FreddieMac, there is even more evidence which indicates that government should be the last entity to be counted on for effective oversight. It is government oversight which required banks and loaning entities such as FannieMae and FreddieMac to enter into high risk loans that could not be paid off. All of which helped to usher in the banking crisis that led the way to our current financial crunch.

It is all an example of government overreaching and innefficiency and innaccuracy.

Initially compliance with the Sarbanes-Oxley Act was projected to cost businesses, that want to go public, about $91 thousand dollars to do so but the actual figure is over $4 million dollars.

This typical government miscalculation has helped to push the start up time for businesses from five years to twelve years and it is adding to the stagnation of a much needed rate of growth for our economy.

At a time when the federal government has spent over $ 1 billion 200 million in the name of economic stimulus, does it really make sense to leave untouched, excessive legislation which is counterproductive to the goals of all that stimulus spending?

When you come down to it, enforcement of Sarbanes-Oxley costs more than it is worth.

That is not to suggest that Sarbanes-Oxley must be scrapped.   It must be amended.

Of the eleven sections in the bill, some have merit. Specifically, those sections which hold business executives and owners more accountable. However, no responsible legislative stimulus action can exist without addressing the many other detrimental sections of the bill which are having a debilitating effect on economic growth.

To allow the so-called Public Company Accounting Reform and Investor Protection Act of 2002 to remain as is, during the economic recovery attempts of 2009, is irresponsible and reckless.

In its current form the bill is destroying new job creation, stifling our entrepreneurial spirit and surrendering entrepreneurial innovation to foreign competitors. None of which adds any value to the hundreds of billions of dollars that are intended to grow our economy.

Without changes to the Sarbanes-Oxley legislation, our government is allowing existing legislation to work against all of their current and future economic recovery measures. Without changes to this bill, we are prolonging the economic downturn we are in and putting our economic future on a course that will put us far behind the burgeoning markets and economies of Asia.

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U4PREZ

A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks “What do two plus two equal?” The mathematician replies “Four.” The interviewer asks “Four, exactly?” The mathematician looks at the interviewer incredulously and says “Yes, four, exactly.”

Then the interviewer calls in the accountant and asks the same question “What do two plus two equal?” The accountant says “On average, four – give or take ten percent, but on average, four.”

Then the interviewer calls in the economist and poses the same question “What do two plus two equal?” The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, “What do you want it to equal”?

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A REAL ECONOMIC RECOVERY PACKAGE DOESN’T ROB US BLIND

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Bookmark and Share     As the senate discusses how to construct a package that will get enough support from congress to become law, the Republican National Committee’s newly elected Chairman, Mike Steele, took to the airwaves to discuss options.

Taking Republicans back to their economic roots, Steele reminds us that the fastest way to stimulate the economy is to empower the people and take less money away from the people in the first place.

Although Republicans should not object to a package geared at stimulating the economy, they are right to object to a bill that is designed to spend money simply for the sake of spending and that is exactly what the bill in question has become, a free for all, spending bill.  Republicans are right to deny support for a bill that is directed at filling the pockets of special interests while emptying the pockets of taxpayers.

One example of the questionable spending in this so-called stimulus package,  raised by Chairman Steele, is an amount of $45 million dollars for the creation of trails for all terrain vehicles.

It is just one of many spending inclusions that help to bring this bill, intended for economic recovery, to its staggering final total.

Although wasteful spending is not what ushered in the credit crunch that led to the financial crisis we are in, it does not help matters.  Wasteful spending only exacerbates matters.  It leads to more taxes which in turn leads to less spending and less spending does not help to stimulate the economy.  Less spending and less economic growth does not increase employment and none of it boosts our economy.

PhotobucketAll of this indicates that an economic stimulus package packed with wasteful spending is not an answer to our problems.  Such a package can only make matters worse and prolong the economic downturn we are experiencing.

That is not to say that the government cannot help.  It can.  Our government needs to create a package that is aimed at one goal and one goal only. Stimulate the economy.

Currently, under the guise of recovery, legislators are throwing in spending suggestions that are designed more at gaining favor from special interest groups in their home districts than at assisting the American people at large. 

Instead of helping to secure our national economic future, many of them are trying to secure a substantial financial donation from special interest groups for their reelection.

That is why much of the spending in this bill does little if anything to “stimulate” the economy at anytime within the immediate future.

A more rational approach to a stimulus package could result in a far less expensive spending bill.  A more rational anteconomic-stim1approach to the stimulus package would contain more and larger, immediate, short term tax cuts that allow people to keep and spend more of their own money, while the government enters into some cost saving measures of its own.

In fact the first line of a stimulus package that intends to to spend money should start off with a repeal of the 2.8 percent, automatic pay raise that congress has accepted.

Without a repeal of that measure, the House of Representatives and the Senate can not be taken seriously.

Without their willingness to accept the fact that we are living through tough economic times and that they too must share in a collective national sacrifice, they can not be counted on or trusted to take up solutions to our problems seriously.

Many of the spending measures in the current package have no right to be considered in an omnibus bill like this one.  Many of the proposed spending measures in this bill should stand alone and be voted on separately and in their own right.

What should be included in an omnibus stimulus package are those measures which will

  1. reduce the cost to operate government
  2. free up credit in the free market place
  3. enhance public infrastructure, transportation and energy needs.

The purpose of the third aspect to any serious stimulus package directly helps the economy in both the short and the long term and spending in each of the three categories mentioned, infrastructure, transportation and energy, will directly relate to increased employment in the United States.

Barring cost saving measures, freeing up credit and limiting spending to public energy, transportation and infrastructure initiatives, the economic stimulus package need not include extras for hobbyists, lobbyists and other special interests.

PhotobucketUnder the liberal leadership of the liberal controlled federal government, we are witnessing the construction of a bill that takes advantage of economic trouble rather than eases the economic crisis.

Since 2004 Republicans have slowly but surely lost their roots of fiscal responsibility. 

Since 2006 voters have been cleaning house and ridding us of those Republicans who have gone astray and now in, 2009, remaining Republican lawmakers are faced with a defining moment.

Will they rollover and participate in a reckless, historic bill that takes advantage of our problems or will they stand firm and put forth an alternative solution that harkens back to our original principles and beliefs that demonstrate that  government is not the solution but rather the problem? 

Either way, the first step starts with a bill that repeals the pay raise that they have so willingly accepted.

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Click below to hear Mike Steele’s weekly radio address:

Mike Steele’s response To the Stimulus Package

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WANTED: ONE ARMED ECONOMIST

“Give me a one-armed economist!” demanded President Harry S. Truman.

 President Truman was the first president to appoint a council of economic advisers. Unlike some later presidents, he actually liked to listen to his policy advisers.

However, he preferred a clear recommendation, not a long discussion of the advantages and disadvantages of a particular course of action.

He quickly grew tired of economist who gave a good recommendation, and then began, “On the other hand. . .”

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Ask Not What Your Country Can Spend For You. Ask What You Can Spend For Your Country

PhotobucketI am no economist but in reviewing the assessments and suggestions of major economists there seems to be some very valid suggestions, at least from what a layman like me can understand.

Despite my lack of economic expertise, I do know the basic fundamentals of the economy and I believe my understanding of those fundamentals is what can sometimes create some confusion when reviewing the advice of so called financial experts and leading economic government officials.

All the suggestions offered by them are based on spending.

Spending is what grows our economy. The more we consume and spend, the more that is produced. The more that is produced increases the need to employ more people to meet those production needs. By employing more people we are empowering others to spend more and from there the cycle continues in an ever growing circumference of increased wealth.

Sounds pretty simple. Yet other factors help to complicate things and break the seemingly simple and free flow of this cycle. Things such as unexpected shortages of materials, import and export troubles, natural disasters which influence the chain of events, and many more all factor in the process.

While understanding this, what is responsible for the current economic crisis?

Has there been some sort of natural disaster that has depleted a particular basic and essential resource that our economic cycle relies on? Has there been a total collapse of certain industries which have thrown the cycle off with an inordinate amount of unemployment and consumption which further deteriorate the supply and demand cycle?

To a certain, small extent, events like that have taken place but not in some kind of all consuming way. There have been droughts effecting crops and downturns in some markets that have produced layoffs. But none have been to the extent which has, for example, made wheat crops extinct or stopped cars from being made.

So what’s the problem?

Well in my unprofessional, economic, opinion, the problem is rooted in something that government financial experts are not discussing. In fact, in my opinion, most solutions being initiated by government officials, past, present and future, are the problem. They are trying to put icing on a cake before they baked it. They all promote spending.

In tune with the laws of supply and demand, spending is good. However; the focus on spending has been accentuated and promoted so much and for so long that it has brought about a couple of misguided generations that have taken that advice too far.

As a society we have become accustomed to spending more than we have, and responsibly. should.

The predatory promotional practices that financial markets undertake ,in an attempt to make more money of their own, is a big part of the current economic crisis. It is a crisis brought about by the chickens coming home to roost and the bill coming forward to be paid.

We have taken the advice of Republican and Democrat leaders and we have spent. The government has even taken their own advice and spends. The government has spent money in order to give us money to spend with. They call it an economic stimulus. The problem though is that

  1. The government doesn’t really have enough money to do that. They have their own, our own, deficit, and…….
  2. The money they gave us back in this so called stimulus package was ours, so maybe they should have taken less from us in the first place.

Those two points alone raise doubts about the soundness of the “spending solution” given to all of our problems. Yet, those in charge still offer it as the most sound solution to our problems. They even go a step further and ask people to not save any of the monies given out in stimulus packages.

Although I do not have a problem with spending,………. all you have to do is tag along with me at clothing or shoe store to realize that,….. I do have problem with spending money that we don’t have. And there in lies the problem.

The promoting of spending practices has created generations of spenders. These spenders don’t even use real money. They use plastic. We all use plastic. In some instances you can’t even pay for a good or service without credit.

This has led to our getting accustomed with living on borrowed money,……. plastic,……..fake money.

For decades now, the government has encouraged this practice. Government policies have encouraged borrowers and lenders to enter into deals that neither can really afford. The greatest example of this was the Homeownership Initiative that was created under the Clinton administration. It forced lenders to make a significant number of loans available to unqualified borrowers, borrowers who could not pay these loans back. The practice was so popular that it helped to create the banking crisis that ushered in the current crisis.

The promoted “spending” solutions that have dominated our problem solving efforts with the economy are, in and of themself, part of the problem.

Americans need to get back to an economy that is based on sound fiscal policies. That statement brings into play many suggested economic theories and actions but when I write “sound fiscal policies” I am not making reference to some deep epistemology of mankind or the ontology of finances. Nor am I debating the importance of the Keynesian school of thought. I am simply saying that society…..our citizens, needs to begin living within its means.

If one is not sure if they have enough money to put food on their plate, they should not be buying cell phones and using it to send out text messages asking if they can borrow money for dinner. I mean I am sure AT&T or T-Mobile appreciate the fee that your purchase and contracts will cost you but you will they be pleased with the bill collector that they have to employ to get their money.

My point is, we have gotten away from living within our means. We have become accustomed with living life on borrowed money. This practice has brought us to where we are today. And truth be told, there is no end in site.

I believe that we are about to enter a very tough transitional time that will last for many years. It is a time that will have us getting familiar with living within our means.

Doing so will mean less spending. Less spending will lead to less employment, and so on and so on. But this does not mean that the sky will fall and the economy will ultimately implode. It means that we will endure a difficult adjustment period but once we have become reacquainted with real money, sound personal financial habits and living within our means, the economy will eventually stabilize and growth will again be seen.

I am not alone in this thinking. Former Tennessee Senator Fred Thompson has recently made a video addressing this same issue. In it, he takes a tongue-in-cheek approach to our current “spending solutions”.

Take a moment to view it. You’ll get a kick out of it. It left me wondering where the Fred Thompson, that we see in this video, was when he ran for the G.O.P.’s presidential nomination?

 

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Post Election Toast

The Election Is Over, The Results Are Known.

The Will of the People Has Been Clearly Shown.

So Let All Get Together And Let Bitterness Pass

I’ll Hug Your Elephant, And You Kiss My Ass.

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REPUBLICANS TO MCCAIN: NAME MITT ROMNEY YOUR TREASURY SECRETARY

In an earlier post I presented a campaign strategy for McCain to pursue . It included a number of sub themes to hit upon in addition to a homestretch strategy that laid out a schedule of releasing a new policy initiative on some of the most important issues facing us and to present them every other day. This would help McCain to control the news cycles rather than be controlled by them. It would also allow Americans to see the kind of President that he could be rather than see how well or poorly he can campaign for President.

As we all know, the economy is the issue dominating our minds at the moment. In light of that, if McCain were to use the strategy that I have previously proposed, he should present an economic stabilization package.

If I were managing his campaign I would assemble his economic team and hammer out the details. Then I would have that package carefully reviewed. Weigh the pro and cons, rip it apart to the same extent that Barack Obama would and be prepared to tear down and disprove those criticisms.

Once that has been done, give the media six hours notice and present the following press release.

At this press conference, as alluded to in the release, John McCain should start off by explaining how we got to where we are today. Outline the lack of responsibility practiced by the government, the unethical practices of private sector loaning practices and the lack of personal responsibility that many Americans have exercised.

McCain should use this press conference to signal his intention to gear us in a new direction. A direction that forces our society to deal more with hard money than fake and speculated money. A direction that focuses on what we have more than what we don’t have and living within our means as opposed to beyond our means.

State that such a direction begins by example with our own government.

From that point on, get into the details of the stabilization package. Outline initiatives which explain budget cuts. Call for a legislative reform of the process which allows unassociated riders to be placed on bills which produce wasteful pork barrel spending and funding for things that have nothing to do with the bills that they are attached.

Outline the tax cuts which will stimulate the economy, help to increase employment and grow our economy .

Senator McCain should also announce an executive order that would put a halt to the long standing Clinton National Homeownership initiative which forced Fannie Mae and Freddie Mac to enter into hundreds of thousands of sub prime, high risk loans. Loans which helped to inflate the housing bubble that recently burst because it was over inflated by extending loans to people who could not afford to pay them back.

There are several other aspects to an appropriate stabilization package that must be announced as a part of this proposal and after doing so John McCain needs to tie the package up with a ribbon that makes his initiatives more than acceptable but hopeful.

He should announce that Mitt Romney will be the person who will implement this package and oversee the treasury of our nation as John McCain’s secretary of the United States Treasury.

He May Not Still Be Running For President, But  He Can Help Get One Elected

He May Not Still Be Running For President, But He Can Help Get One Elected

This would be seen by some as cocky. To present a cabinet before you have the house you will put them in may seem unusual but in this case it is more than appropriate. In this case it is a move that doesn’t leave Americans open to surprises. The man running against John McCain is full of surprises. He has no record of accomplishments for us to get a sense of what he would do and he is associated with some of the most corrupt, shady and dangerous characters that politics has to offer.

From fundraiser and friend, convicted slum lord Tony Rezko to racist, American hating Rev. Wright and domestic terrorist William Ayers, one must wonder who Obama will bring into his cabinet. What kind of people would he have steer our economy?

This is John McCain’s opportunity to be bold and upfront. Leave no doubt in in the minds of Americans about John McCain’s judgment. Announce his economic team. Put forward names like Meg Whitman of Ebay. Suggest a position for Michael Bloomberg. Tell us who your director of the Office of Management and Budget would be and declare Mitt Romney as the chief financial director of our nation.

Mitt Romney understand s how the economy works. He He has created wealth in the private sector, grown business and economies. He has increased employment in both the state that he ran and the companies he helped to build.

He took the state of Massachusetts and overcame it’s Taxachusettes moniker by lowering taxes and meeting budgets.has operated under budgets both as a head of state and CEO. He has created wealth in the private sector, grown business and economies. He has increased employment in both the state that he ran and the companies he helped to build.

Additionally, Mitt Romney has never failed at any responsibility given to him. He took a corruption strewn, beleaguered Olympics in Salt Lake City that was losing money and turned it around . He made it one of the most secure, smooth running and profitable Olympic spectaculars in history.

Mitt Romney has never led a business into bankruptcy and required a government bailout or exited from the stage with a golden parachute. He grew businesses and helped others to grow their own. All in all Mitt Romney has been a solution to problems not a part of the problems and that is what we need . It is what McCain needs and any future President needs.

Therefore McCain should be bold. He should not only use this campaign to outline his direction, he should make public, the names of the people who will help him carry out that direction when he is President.

A guy was lost in the mall at the Washington Monument.

He stopped a cop and asked, “What side is the State Department on ?”

To which the cop answered, “Ours, I hope.” 

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